Why Robert Thinks You Should Buy Argo Blockchain Shares

Why Robert Thinks You Should Buy Argo Blockchain Shares

over 2 years ago3 mins

Mentioned in story

Summary:

  • Argo Blockchain provides a way to bet on crypto prices via the stock market, but with the added benefit of tangible company assets backing the share price.

Tell us about yourself, Robert

In my professional life, I’m an academic – but not in economics or trading. In my outside-of-work life, I’m a small-time retail investor looking to defeat poor interest rates and to have some skin in the game of my assessments.  

What’s the pitch?

A long-term investment in Argo Blockchain (ticker: ARB).

What does Argo Blockchain do?

It’s a cryptocurrency miner – primarily in bitcoin and zcash – with its own reserves of bitcoin. It is said to hold 1,108 bitcoin, having mined 716 bitcoin in the year to the end of May. Argo also carries a valuation connected to its servers and the associated buildings and land. 

What’s your investment thesis?

  • Warren Buffett famously said that in a gold rush you do not want to be the prospector, you want to be selling shovels. So it goes with Argo Blockchain. This stock gives investors a way of tracking shifts in sentiment towards cryptocurrency, but with some tangible assets sitting behind the company: servers, warehouses, and its own reserve of coins.
  • Argo’s share price is currently 124p, down from a peak of 284p in February. It had spent much of the previous 12 months at about 10p. The stock has ridden – positively and negatively – the rise and fall in bitcoin. Argo is still carrying a marginal premium in its price, but crypto-related businesses seem to be partially disconnected from their fundamentals. This is the moment to buy in and hope that the price will inflate as bitcoin and its competitors continue to gain traction.
  • This can be seen as a short-term or a long-term play, but it is entirely driven by the share price as the company currently pays no dividend.
  • Over the long term, Argo has first-mover advantage and scale to diversify into new coins as they appear.

What are the key events you’re watching?

  • Whether sentiment – prominent tweets, regulatory activism, etc – continues to weigh heavily on price.
  • Whether chip availability helps or hinders Argo in expanding its mining operations.
  • Whether quantum computing threatens to remove its market viability.

What’s the upside potential if your thesis is correct?

A keenly rising stock price. A cryptocurrency investment that is not purely premised on the price of bitcoin – as there are tangibles – but currently closely aligned to bitcoin sentiment and price. The future prospect of a dividend if success is maintained over the long-term. 

What are the big risk factors you’ve spotted, and how do you plan to mitigate them?

  • To mitigate against cratering bitcoin sentiment driving the shares lower, I would set a floor price of about 70p.
  • There is also a case for setting a buy price at about 50p should the stock crash.

Do you agree with Robert’s Argo analysis? Fill your thoughts in here.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG